Screening potential tenants is a proactive process designed to protect your property investment and ensure a steady income. A thorough screening process helps identify reliable applicants who are likely to pay rent on time, maintain the property, and adhere to the terms of the lease. This reduces the risk of costly issues like property damage or the need for an eviction. Ultimately, careful tenant selection fosters a safe, respectful, and stable living environment for everyone in the rental community.
Establish Your Rental Criteria
Before you advertise your property or speak to a single applicant, you must first establish a set of written, objective rental criteria. These criteria act as a baseline for qualifying tenants and should be based on legitimate business reasons.
Your documented standards should cover several areas. A common financial requirement is an income-to-rent ratio, often stipulating that an applicant’s gross monthly income must be at least three times the monthly rent. Landlords also typically set a minimum credit score, often in the 620 to 650 range, as a baseline for financial responsibility. You should also clearly define your policies on important matters such as pets, smoking, and the maximum number of occupants allowed in the unit, in line with local ordinances. These established criteria must be applied equally to all applicants without exception.
Collect a Thorough Application
The rental application is the primary tool for gathering standardized details from every prospective tenant, ensuring you have a consistent basis for comparison. Every individual over the age of 18 who intends to live in the property should complete their own separate application. This ensures you have a complete picture of all the adults who will be responsible for the lease.
An effective application must request specific and essential information. This includes the applicant’s full legal name, phone number, and email address, as well as their current and previous residential addresses. It is just as important to collect detailed employment and income information, including the names of current employers. The application should also ask for personal references. Crucially, the form must contain a clear disclosure statement that authorizes you to perform background checks, run a credit report, and contact all provided references, followed by a signature line for the applicant to provide their explicit consent.
Verify Financial Information
After collecting applications, the next step is to verify each applicant’s financial stability to determine if they can reliably afford the rent. This process moves beyond the initial information provided on the application to confirm its accuracy. The goal is to build a clear picture of an applicant’s ability to meet their monthly rent obligations.
The most common method for income verification is requesting recent pay stubs, typically from the last two or three months, which show gross earnings. For self-employed individuals, recent tax returns or W-2 forms can serve the same purpose. Another reliable option is to ask for bank statements that demonstrate a steady income stream or substantial savings.
In addition to reviewing documents, it is prudent to contact the applicant’s current employer directly. While many companies will not disclose salary details, they can typically confirm an individual’s employment status and their length of service. This conversation helps to verify that the applicant has a stable source of income as stated on their application.
Conduct Background and Reference Checks
With financial stability confirmed, the next stage involves conducting background and reference checks to paint a fuller picture of the applicant’s reliability. These checks provide insights into an applicant’s past behavior as a tenant and overall level of responsibility. This part of the process helps you assess risks that financial data alone cannot reveal.
Credit Report
When reviewing a credit report, it is important to look beyond just the three-digit score. A detailed analysis of the full report can reveal a history of late payments on loans or credit cards, which may indicate future issues with paying rent on time. You should also look for accounts that have been sent to collections, as this signals that a creditor has given up on receiving payment. High levels of outstanding debt or recent bankruptcies are also significant red flags that suggest financial distress.
Criminal History
When examining an applicant’s criminal history, the focus should be on convictions that are directly relevant to the safety of the property and the well-being of other tenants. This might include violent crimes, substantial property damage, or other offenses that could pose a threat to the community. It is important to adhere to local and state laws, as well as guidance from the Fair Housing Act, which regulates how criminal records can be used in housing decisions to avoid discrimination.
Eviction Records
A past eviction is one of the most significant indicators of a high-risk tenant. Eviction records can be checked through specialized screening services or sometimes through public court records. The presence of a past eviction filing or judgment against an applicant strongly suggests a history of failing to meet lease obligations, whether through non-payment of rent or other serious violations.
Previous Landlord References
Contacting an applicant’s previous landlords provides direct insight into their behavior as a tenant. When you speak with a former landlord, you should ask specific questions to get a clear picture:
- Did the tenant consistently pay rent on time?
- Did they maintain the property in good condition?
- Were there any complaints from neighbors about noise or other issues?
- Would you be willing to rent to them again?
Make a Compliant Final Decision
The final step is to use all the gathered information to select a tenant. This decision should not be based on a gut feeling but on a systematic evaluation of each applicant against your pre-established rental criteria. Applying your objective standards consistently to every application is your best defense against accusations of discrimination.
Make your choice in accordance with the Fair Housing Act, which prohibits housing discrimination based on seven protected classes:
- Race
- Color
- Religion
- National origin
- Sex
- Disability
- Familial status
Your decision must be based solely on legitimate business factors, such as the applicant’s ability to pay rent and their history of responsible tenancy. Documenting your evaluation process for each applicant can provide evidence that your decision was made on a non-discriminatory basis.
If you decide to reject an applicant due to information discovered in their credit report or a criminal background check, you are legally required to notify them in writing. This notification is known as an adverse action notice. The notice must inform the applicant of the reason for the denial and provide the name and contact information of the reporting agency that supplied the information, giving the applicant an opportunity to check their report for inaccuracies.